Advantech Co., Ltd. and Subsidiaries Consolidated Financial Statements for the Six Months Ended June 30, 2016 and 2015 and Independent Auditor

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(1)Advantech Co., Ltd. and Subsidiaries. WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. Consolidated Financial Statements for the Six Months Ended June 30, 2016 and 2015 and Independent Auditors’ Review Report.

(2) INDEPENDENT AUDITORS’ REVIEW REPORT. The Board of Directors and Shareholders Advantech Co., Ltd. We have reviewed the accompanying consolidated balance sheets of Advantech Co., Ltd. (the “Company”) and its subsidiaries (collectively referred to as the “Group”) as of June 30, 2016, December 31, 2015 and June 30, 2015 and the related consolidated statements of comprehensive income for the three months and six months ended June 30, 2016 and 2015, and changes in equity and cash flows for the six months ended June 30, 2016 and 2015. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to issue a report on these consolidated financial statements based on our reviews. However, the financial statements of an associate, Axiomtek Co., Ltd., as of and for the six months ended June 30, 2016 and 2015 were reviewed by other independent CPAs. This investee’s shares of the investments accounted for using the equity method were 1.11% (NT$409,659 thousand) and 1.10% (NT$375,963 thousand) of the Company’s total consolidated assets as of June 30, 2016 and 2015, respectively. The Company’s shares of its profits were 1.08% (NT$19,828 thousand), 1.19% (NT$19,354 thousand), 1.37% (NT$47,571 thousand) and 1.37% (NT$42,675 thousand) of the Company’s consolidated pretax profits for the three months and six months ended June 30, 2016 and 2015, respectively.. As disclosed in Note 12, the financial statements of the Company’s subsidiaries included in the consolidation for the six months ended June 30, 2016 and 2015 had not been reviewed, except those of significant subsidiaries. The total assets of the unreviewed subsidiaries were 15.31% (NT$5,647,094 thousand) and 13.97% (NT$4,790,767 thousand) of the Company’s consolidated total assets as of June 30, 2016 and 2015, respectively. The total liabilities of the unreviewed subsidiaries were 12.55% (NT$1,812,304 thousand) and 15.54% (NT$2,074,578 thousand) of the Company’s consolidated total liabilities as of June 30, 2016 and 2015, respectively. The comprehensive incomes of these subsidiaries were 23.50% (NT$290,264 thousand), 10.26% (NT$125,422 thousand), 24.30% (NT$644,649 thousand) and 17.79% (NT$374,092 thousand) of the Company’s consolidated comprehensive incomes in the three months and six months ended June 30, 2016 and 2015, respectively. Also, as stated in Note 13 to the consolidated financial statements, the investments accounted for using the equity method were NT$157,340 thousand and NT$27,617 thousand as of June 30, 2016 and 2015. The equities in earnings of the associates were a loss of NT$4,243 thousand, a profit of NT$51 thousand, a loss of NT$5,151 thousand and a loss of NT$293 thousand of the Company’s consolidated net income in the three months and six months ended June 30, 2016 and 2015, respectively, and these investment amounts as well as additional disclosures in Note 32 “Information on Investees” were based on the investees’ unreviewed financial statements for the same reporting periods as those of the Company.. -1-. WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. Except as stated in the following paragraph, we conducted our reviews in accordance with Statement of Auditing Standards No. 36 “Review of Financial Statements” issued by the Auditing Standards Committee of the Accounting Research and Development Foundation of the Republic of China. A review consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the Republic of China, the objective of which is the expression of an opinion regarding the consolidated financial statements taken as a whole. Accordingly, we do not express such an opinion..

(3) Based on our reviews and the review reports of the other auditors, except for the effects of any adjustments as might have been determined to be necessary had the financial statements of the Company’s subsidiaries described in the preceding paragraph been reviewed, we are not aware of any material modifications that should be made to the consolidated financial statements of Advantech Co., Ltd. and subsidiaries referred to above for them to be in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting” endorsed by the Financial Supervisory Commission (FSC) of the Republic of China.. Notice to Readers The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to review such consolidated financial statements are those generally applied in the Republic of China. For the convenience of readers, the independent auditors’ review report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ review report and consolidated financial statements shall prevail.. -2-. WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. July 29, 2016.

(4) ADVANTECH CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands of New Taiwan Dollars). June 30, 2016 (Reviewed) Amount. ASSETS CURRENT ASSETS Cash and cash equivalents (Note 6) Financial assets at fair value through profit or loss - current (Notes 7 and 27) Available-for-sale financial assets - current (Notes 8 and 27) Debt investments with no active market - current (Note 9) Notes receivable (Notes 10 and 28) Accounts receivable (Note 10) Accounts receivable from related parties (Note 28) Other receivables Other receivables from related parties (Note 28) Inventories (Note 11) Other current financial assets (Note 29) Other current assets (Note 16). %. June 30, 2015 (Reviewed) Amount. %. $ 3,509,259 219,422 3,582,932 8,111 830,722 6,274,940 7,340 28,564 88,313 4,990,962 112,841 491,092. 10 1 10 2 17 14 1. $ 4,358,259 176,389 1,755,843 3,171 970,722 5,428,574 26,775 40,811 4,868,860 456,342. 13 1 5 3 16 14 1. $ 3,473,436 196,536 5,571,694 20,703 718,428 5,712,486 5,376 38,453 81,917 4,679,895 18,650 423,825. 10 1 16 2 17 14 1. 20,144,498. 55. 18,085,746. 53. 20,941,399. 61. 1,715,282 566,999 9,866,350 3,399,784 445,918 247,964 86,245 345,986 60,053. 5 1 27 9 1 1 1 -. 1,747,598 477,984 9,576,879 1,139,559 227,686 217,989 65,753 2,279,881 100,875 59,183. 5 2 28 3 1 1 7 -. 1,983,308 403,580 9,241,729 1,125,132 236,025 163,813 43,377 92,987 58,205. 6 1 27 3 1 1 -. 16,734,581. 45. 15,893,387. 47. 13,348,156. 39. $ 36,879,079. 100. $ 33,979,133. 100. $ 34,289,555. 100. Total current assets NONCURRENT ASSETS Available-for-sale financial assets - noncurrent (Notes 8 and 27) Investments accounted for using the equity method (Note 13) Property, plant and equipment (Note 14) Goodwill (Note 15) Other intangible assets Deferred tax assets (Notes 4 and 22) Prepayments for business facilities Prepayments for investments (Note 25) Long-term prepayments for lease (Note 16) Other noncurrent assets Total noncurrent assets TOTAL. December 31, 2015 (Audited) Amount %. CURRENT LIABILITIES Short-term borrowings (Note 17) Financial liabilities at fair value through profit or loss - current (Notes 7 and 27) Trade payables (Note 28) Dividends payable Other payables (Note 18) Current tax liabilities (Notes 4 and 22) Short-term warranty provision Other current liabilities. $. Total current liabilities NONCURRENT LIABILITIES Deferred tax liabilities (Notes 4 and 22) Long-term accounts payable Net defined benefit liabilities (Notes 4 and 19) Other noncurrent liabilities Total noncurrent liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY Share capital Ordinary shares Advance receipts for share capital Total share capital Capital surplus Retained earnings Legal reserve Unappropriated earnings Total retained earnings Other equity Exchange differences on translation of foreign financial statements Unrealized gains on available-for-sale financial assets Total other equity Total equity attributable to owners of the Company NON-CONTROLLING INTERESTS Total equity TOTAL. The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche review report dated July 29, 2016). -3-. 484,125 8,179 3,540,115 3,791,118 3,355,675 1,202,743 170,294 617,559. 1 10 10 9 3 1 2. 13,169,808. $. 880,625 6,352 3,226,069 3,380,317 1,057,226 145,646 546,295. 3 9 10 3 2. 36. 9,242,530. 916,627 182,336 175,247. 2 1 -. 1,274,210. $. 115,000 13,091 3,536,311 3,787,255 3,125,853 887,015 137,281 464,183. 10 11 9 3 1 1. 27. 12,065,989. 35. 938,491 183,540 160,795. 3 1 -. 915,151 37,190 164,261 166,231. 3 1. 3. 1,282,826. 4. 1,282,833. 4. 14,444,018. 39. 10,525,356. 31. 13,348,822. 39. 6,318,531 6,318,531 5,720,675. 17 17 16. 6,318,531 6,318,531 5,587,555. 19 19 16. 6,315,186 1,720 6,316,906 5,448,543. 19 19 16. 4,473,276 5,569,394 10,042,670. 12 15 27. 3,962,842 7,098,449 11,061,291. 12 21 33. 3,962,842 4,577,900 8,540,742. 12 13 25. 108,555 109,308 217,863. 1 1. 271,859 68,265 340,124. 1 1. 62,033 417,096 479,129. 1 1. 22,299,739. 61. 23,307,501. 69. 20,785,320. 61. 135,322. -. 146,276. -. 155,413. -. 22,435,061. 61. 23,453,777. 69. 20,940,733. 61. $ 36,879,079. 100. $ 33,979,133. 100. $ 34,289,555. 100. WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. LIABILITIES AND EQUITY.

(5) ADVANTECH CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited). OPERATING REVENUE (Note 28) Sales Other operating revenue. $ 10,338,007 374,505. 96 4. 10,712,512. OPERATING COSTS (Notes 11, 19, 21 and 28) GROSS PROFIT. %. %. 9,755,333 271,614. 97 3. $ 20,187,723 598,189. 97 3. $ 18,333,407 478,207. 97 3. 100. 10,026,947. 100. 20,785,912. 100. 18,811,614. 100. 6,405,413. 60. 6,046,484. 60. 12,341,948. 59. 11,240,372. 60. 4,307,099. 40. 3,980,463. 40. 8,443,964. 41. 7,571,242. 40. 1,078,665. 10. 963,749. 10. 2,167,691. 11. 1,881,504. 10. 627,881. 6. 515,032. 5. 1,295,435. 6. 988,217. 5. 922,795. 8. 869,447. 9. 1,820,584. 9. 1,718,128. 9. Total operating expenses. 2,629,341. 24. 2,348,228. 24. 5,283,710. 26. 4,587,849. 24. OPERATING PROFIT. 1,677,758. 16. 1,632,235. 16. 3,160,254. 15. 2,983,393. 16. 15,585 2,676. -. 19,405 12,241. -. 42,420 8,517. -. 42,382 23,377. -. 113,161. 1. (733). -. 259,215. 1. (2,099). -. 3,801. -. (7,996). -. 5,453. -. 161,154. 1. (34,004 ). -. (32,238). -. (82,495). -. (173,372). (1 ). 34,427 196. -. 14,947 165. -. 69,095 410. 1 -. 70,480 253. -. 20,689 (1,315). -. 28,637 (1,195). -. 38,049 (3,397). -. 52,899 (2,046). -. (4,776) (281). -. (39,209) (1,666). -. (34,864) (1,113). -. (49,562) (1,895). -. 150,159. 1. (7,642). -. 301,290. 2. 121,571. -. 1,827,917. 17. 16. 3,461,544. 17. 3,104,964. 16. Total operating revenue. OPERATING EXPENSES (Notes 21 and 28) Selling and marketing expenses General and administrative expenses Research and development expenses. NONOPERATING INCOME Share of the profit of associates accounted for using the equity method (Note 13) Interest income Gains (losses) on disposal of property, plant and equipment Gains (losses) on disposal of investments Foreign exchange losses, net (Notes 21 and 31) Gains on financial instruments at fair value through profit or loss (Note 7) Dividend income Other income (Notes 8 and 28) Finance costs (Note 21) Losses on financial instruments at fair value through profit or loss (Note 7) Other losses Total nonoperating income PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Note 22) NET PROFIT FOR THE PERIOD. (358,711). 1,469,206. (3 ). 14. $. For the Six Months Ended June 30 2016 2015 Amount % Amount. 1,624,593. (291,900). 1,332,693. -4-. (3 ). 13. (675,877). 2,785,667. (3 ). 14. (566,059). 2,538,905. (3 ). 13 (Continued). WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. For the Three Months Ended June 30 2016 2015 Amount % Amount.

(6) ADVANTECH CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited). OTHER COMPREHENSIVE INCOME (LOSS) Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations (Note 20) Unrealized gains (losses) on available-for-sale financial assets (Note 20) Share of the other comprehensive income of associates accounted for using the equity method (Note 20) Income tax relating to items that may be reclassified subsequently to profit or loss (Notes 20 and 22). $. NET PROFIT (LOSS) ATTRIBUTABLE TO: Owners of the Company Non-controlling interests. TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO: Owners of the Company Non-controlling interests. EARNINGS PER SHARE (Note 23) Basic Diluted. (1 ). (122,038). (1 ). (374). Other comprehensive income (loss) for the period, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE PERIOD. (132,146). $. For the Six Months Ended June 30 2016 2015 Amount % Amount. %. (102,908). (1 ). (22,517). (963). -. $. (205,462). (1 ). -. 41,043. -. $. %. (341,814). (2 ). -. (146,181). (1 ). (2,301). -. (5,095). -. 20,492. -. 15,609. -. 33,448. -. 56,597. 1. (234,066). (2 ). (110,779). (1 ). (133,272). (1 ). (436,493). (2 ). $. 1,235,140. 12. $. 1,221,914. 12. $. 2,652,395. 13. $. 2,102,412. 11. $. 1,464,273 4,933. 14 -. $. 1,327,917 4,776. 13 -. $. 2,776,188 9,479. 13 -. $. 2,534,787 4,118. 14 -. $. 1,469,206. 14. $. 1,332,693. 13. $. 2,785,667. 13. $. 2,538,905. 14. $. 1,242,186 (7,046). 12 -. $. 1,229,196 (7,282). 12 -. $. 2,653,927 (1,532). 13 -. $. 2,112,283 (9,871). 11 -. $. 1,235,140. 12. $. 1,221,914. 12. $. 2,652,395. 13. $. 2,102,412. 11. $ $. 2.32 2.31. $ $. 2.10 2.10. $ $. 4.39 4.38. $ $. 4.01 4.00. The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche review report dated July 29, 2016). (Concluded). -5-. WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. For the Three Months Ended June 30 2016 2015 Amount % Amount.

(7) ADVANTECH CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited). Equity Attributable to Owners of the Company. BALANCE AT JANUARY 1, 2015. $. 6,301,031. Effect of retrospective application and retrospective restatement BALANCE AT JANUARY 1, 2015 AS RESTATED. $. 11,060. Capital Surplus (Notes 20, 21, 24 and 26). Total $. 6,312,091. $. 5,306,958. Retained Earnings (Notes 20 and 26) Unappropriated Legal Reserve Earnings Total $. $. 3,472,064. $. 6,358,318. -. -. -. -. -. 6,301,031. 11,060. 6,312,091. 5,306,958. 3,472,064. -. -. -. -. 490,778 -. 4,815. 18,409. -. -. Appropriation of the 2014 earrings Legal reserve Cash dividends on ordinary shares Recognition of employee share options by the Company. 14,155. (9,340). $. (5,045). 9,830,382 (5,045). 338,356. $. 563,277. Non-controlling Interests (Notes 20 and 26). Total $ 22,351,064. $. -. 338,356. 563,277. -. -. -. -. -. 23,224. -. 23,224. 9,825,337. (490,778) (3,787,255). (3,787,255). -. $ 22,538,064. -. 6,353,273. (5,045). 187,000. Total Equity. 22,346,019. 187,000. (3,787,255). -. (5,045) 22,533,019. (3,787,255). Compensation cost recognized for employee share options. -. -. -. 130,939. -. -. -. -. -. 130,939. -. 130,939. Change in capital surplus from investments in associates accounted for by the equity method. -. -. -. 127. -. -. -. -. -. 127. -. 127. Difference between consideration paid and carrying amount of subsidiaries acquired. -. -. -. (11,457). -. -. -. (43,584). Changes in percentage of ownership interest in subsidiaries. -. -. -. 3,567. -. -. -. -. -. 3,567. -. 3,567. Net profit for the six months ended June 30, 2015. -. -. -. -. -. 2,534,787. 2,534,787. -. -. 2,534,787. 4,118. 2,538,905. Other comprehensive loss for the six months ended June 30, 2015. -. -. -. -. -. -. -. (276,323). (146,181). Total comprehensive income for the six months ended June 30, 2015. -. -. -. -. -. 2,534,787. 2,534,787. (276,323). (146,181). (32,127). (32,127). (21,716). (422,504). (13,989). 2,112,283. (9,871). (65,300). (436,493) 2,102,412. BALANCE AT JUNE 30, 2015. $. 6,315,186. $. 1,720. $. 6,316,906. $. 5,448,543. $. 3,962,842. $. 4,577,900. $. 8,540,742. $. 62,033. $. 417,096. $ 20,785,320. $. 155,413. $ 20,940,733. BALANCE AT JANUARY 1, 2016. $. 6,318,531. $. -. $. 6,318,531. $. 5,587,555. $. 3,962,842. $. 7,098,449. $ 11,061,291. $. 271,859. $. 68,265. $ 23,307,501. $. 146,276. $ 23,453,777. Appropriation of the 2015 earrings Legal reserve Cash dividends on ordinary shares. -. -. -. -. 510,434 -. Compensation cost recognized for employee share options. -. -. -. 130,939. -. -. Change in capital surplus from investments in associates accounted for by the equity method. -. -. -. 2,181. -. -. Difference between consideration paid and carrying amount of subsidiaries acquired. -. -. -. -. -. Net profit for the six months ended June 30, 2016. -. -. -. -. -. 2,776,188. 2,776,188. Other comprehensive income (loss) for six months ended June 30, 2016. -. -. -. -. -. -. -. (163,304). 41,043. Total comprehensive income (loss) for the six months ended June 30, 2016. -. -. -. -. -. 2,776,188. 2,776,188. (163,304). 41,043. 2,653,927. 5,569,394. $ 10,042,670. 109,308. $ 22,299,739. BALANCE AT JUNE 30, 2016. $. 6,318,531. $. -. $. 6,318,531. $. 5,720,675. $. 4,473,276. The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche review report dated July 29, 2016). -6-. (510,434) (3,791,118). (3,691). $. (3,791,118). -. -. -. -. -. 130,939. -. 130,939. -. -. -. 2,181. -. 2,181. -. -. (3,691). -. -. (3,691). $. 108,555. $. (3,791,118). -. (9,422). 2,776,188. 9,479. (122,261). (11,011) (1,532) $. 135,322. (3,791,118). (13,113) 2,785,667 (133,272) 2,652,395 $ 22,435,061. WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. Issued Capital (Note 20) Advance Receipts for Ordinary Share Capital Shares. Other Equity (Note 20) Exchange Differences on Unrealized Gain Translating (Loss) on Foreign Available-for-sale Operations Financial Assets.

(8) ADVANTECH CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited). For the Six Months Ended June 30 2016 2015. Net cash generated from operating activities. -7-. $ 3,461,544. $ 3,104,964. 291,817 181,525 1,963. 280,055 41,637 1,282. (10,841). 6,638. (34,231) 130,939 3,397 (8,517) (410) (42,420) (259,215) (5,453). (20,918) 130,939 2,046 (23,377) (253) (42,382) 2,099 (161,154). (6,975) 140,000 (622,577) 19,435 17,081 179,836 2,571 (79,831) 178,520 (1,204) (33,430) 71,264 4,455 3,579,243 8,145 314 (4,195) (503,118). (5,823) 231,433 (785,768) 24 (297) 101,655 89,568 130,071 (1,167) (56,823) 202,095 17,405 3,243,949 21,787 237 (1,027) (395,141). 3,080,389. 2,869,805 (Continued). WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Amortization expenses for prepayments of lease obligation Impairment loss recognized (reversal of impairment loss) on trade receivable Net gain on financial assets or liabilities at fair value through profit or loss Compensation cost of employee share options Finance costs Interest income Dividend income Share of profit of associates accounted for using the equity method Loss (gain) on disposal of property, plant and equipment Gain on disposal of investments Changes in operating assets and liabilities Financial assets held for trading Notes receivable Accounts receivable Account receivables from related parties Other receivables Inventories Other current assets Other financial assets Trade payables Net defined benefit liabilities Other payables Other current liabilities Other noncurrent liabilities Cash generated from operations Interest received Dividend received Interest paid Income tax paid.

(9) ADVANTECH CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited). CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of available-for-sale financial assets Proceeds on sale of available-for-sale financial assets Acquisition of investments with no active market Acquisition of associates Net cash outflow from acquisition of subsidiaries Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Acquisition of intangible assets Increase in prepayments for business facilities Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term loans Decrease in short-term loans Decrease in guarantee deposits received Exercise of employee share options Decrease in non-controlling interests Net cash generated from (used in) financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD. $ (3,337,445) 1,588,963 (4,938) (135,000) (1,419,508) (643,171) 519,788 (870) (58,094) (7,983). $ (5,676,586) 3,974,194 (15,556) (698,901) 18,834 (15,589) (15,245) (22,455). (3,498,258). (2,451,304). (396,500) (733) (13,113). 111,920 (316) 23,224 (65,300). (410,346). 69,528. (20,785). (136,600). (849,000). 351,429. 4,358,259. 3,122,007. $ 3,509,259. $ 3,473,436. The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche review report dated July 29, 2016). -8-. (Concluded). WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. For the Six Months Ended June 30 2016 2015.

(10) ADVANTECH CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) (Reviewed, Not Audited). 1. GENERAL INFORMATION Advantech Co., Ltd. (the “Company”) is a listed company established in September 1981. It manufactures and sells embedded computing boards, industrial automation products, applied computers and industrial computers. The Company’s shares have been listed on the Taiwan Stock Exchange since December 1999. To improve the entire operating efficiency of Advantech Co., Ltd. (the “Company”) and its subsidiaries (collectively referred to as the “Group”), the Company’s board of directors resolved on June 30, 2009 to have a short-form merger with Advantech Investment and Management Service (AIMS). The effective merger date was July 30, 2009. As the survivor entity, the Company assumed all assets and liabilities of AIMS. On June 26, 2014, the Company’s board of directors resolved to have a whale-minnow merger with Netstar Technology Co., Ltd. (Netstar), an indirect 95.51%-owned subsidiary through a wholly-owned subsidiary, Advantech Corporate Investment. The effective merger date was July 27, 2014. As the survivor entity, the Company assumed all assets and liabilities of Netstar. The functional currency of the Company is the New Taiwan dollar.. 2. APPROVAL OF FINANCIAL STATEMENTS The consolidated financial statements were approved by the board of directors July 29, 2016.. 3. APPLICATION OF NEW AND REVISED STANDARDS, AMENDMENTS AND INTERPRETATIONS. Rule No. 1050026834 issued by the FSC, should apply the January 1, 2017 version of IFRS, IAS, IFRIC and SIC (collectively, the “IFRSs”) endorsed by the FSC.. New, Amended or Revised Standards and Interpretations Annual Improvements to IFRSs 2010-2012 Cycle Annual Improvements to IFRSs 2011-2013 Cycle Annual Improvements to IFRSs 2012-2014 Cycle Amendments to IFRS 10, IFRS 12 and IAS 28 “Investment Entities: Applying the Consolidation Exception” Amendment to IFRS 11 “Accounting for Acquisitions of Interests in Joint Operations” IFRS 14 “Regulatory Deferral Accounts” Amendment to IAS 1 “Disclosure Initiative”. Effective Date Announced by IASB (Note 1) July 1, 2014 (Note 2) July 1, 2014 January 1, 2016 (Note 3) January 1, 2016 January 1, 2016 January 1, 2016 January 1, 2016 (Continued). -9-. WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. The take effect from January 1, 2017 apply version IFRS, IAS, IFRIC and SIC endorsed by the FSC..

(11) New, Amended or Revised Standards and Interpretations Amendments to IAS 16 and IAS 38 “Clarification of Acceptable Methods of Depreciation and Amortization” Amendments to IAS 16 and IAS 41 “Agriculture: Bearer Plants” Amendment to IAS 19 “Defined Benefit Plans: Employee Contributions” Amendment to IAS 36 “Impairment of Assets: Recoverable Amount Disclosures for Non-financial Assets” Amendment to IAS 39 “Novation of Derivatives and Continuation of Hedge Accounting” IFRIC 21 “Levies”. Effective Date Announced by IASB (Note 1) January 1, 2016 January 1, 2016 July 1, 2014 January 1, 2014 January 1, 2014 January 1, 2014 (Concluded). Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates. Note 2: The amendment to IFRS 2 applies to share-based payment transactions with grant date on or after July 1, 2014; the amendment to IFRS 3 applies to business combinations with acquisition date on or after July 1, 2014; the amendment to IFRS 13 is effective immediately; the remaining amendments are effective for annual periods beginning on or after July 1, 2014. Note 3: The amendment to IFRS 5 is applied prospectively to changes in a method of disposal that occur in annual periods beginning on or after January 1, 2016; the remaining amendments are effective for annual periods beginning on or after January 1, 2016. The initial application of the above New IFRSs, whenever applied, would not have any material impact on the Group’s accounting policies, except for the following:. The amendment clarifies that the recoverable amount of an asset or a cash-generating unit is disclosed only when an impairment loss on the asset has been recognized or reversed during the period. Furthermore, if the recoverable amount of an item of property, plant and equipment for which impairment loss has been recognized or reversed is fair value less costs of disposal, the Group is required to disclose the fair value hierarchy. If the fair value measurements are categorized within (Level 2/Level 3), the valuation technique and key assumptions used to measure the fair value are disclosed. The discount rate used is disclosed if such fair value less costs of disposal is measured by using present value technique. The aforementioned amendment will be adjusted retrospectively on January 1, 2017. b. IFRIC 21 “Levies” IFRIC 21 provides guidance on when to recognize a liability for a levy imposed by a government. It addresses the accounting for a liability whose timing and amount is certain and the accounting for a provision whose timing or amount is not certain. The Group accrues related liability when the transaction or activity that triggers the payment of the levy occurs. Therefore, if the obligating event occurs over a period of time (such as generation of revenue over a period of time), the liability is recognized progressively. If an obligation to pay a levy is triggered upon reaching a minimum threshold (such as a minimum amount of revenue or sales generated), the liability is recognized when that minimum threshold is reached.. - 10 -. WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. a. Amendment to IAS 36 “Recoverable Amount Disclosures for Non-financial Assets”.

(12) c. Annual Improvements to IFRSs:. 2010-2012 Cycle. Several standards including IFRS 2 “Share-based Payment”, IFRS 3 “Business Combinations” and IFRS 8 “Operating Segments” were amended in this annual improvement. The amended IFRS 2 changes the definitions of “vesting condition” and “market condition” and adds definitions for “performance condition” and “service condition”. The amendment clarifies that a performance target can be based on the operations (i.e. a non-market condition) of the Group or another entity in the same group or the market price of the equity instruments of the Group or another entity in the same group (i.e. a market condition); that a performance target can relate either to the performance of the Group as a whole or to some part of it (e.g. a division); and that the period for achieving a performance condition must not extend beyond the end of the related service period. In addition, a share market index target is not a performance condition because it not only reflects the performance of the Group, but also of other entities outside the Group. Share-based Payment Transactions submit to market price conditions, non-market price conditions and non-vesting conditions will apply to different accounting treatments. The aforementioned amendment are expected to effects share-based Payment transactions after 2017. IFRS 3 was amended to clarify that contingent consideration should be measured at fair value, irrespective of whether the contingent consideration is a financial instrument within the scope of IFRS 9 or IAS 39. Changes in fair value should be recognized in profit or loss. The aforementioned amendment applies to business combinations with acquisition date on or after January 1, 2017. The amended IFRS 8 requires an entity to disclose the judgments made by management in applying the aggregation criteria to operating segments, including a description of the operating segments aggregated and the economic indicators assessed in determining whether the operating segments have “similar economic characteristics”. The amendment also clarifies that a reconciliation of the total of the reportable segments’ assets to the entity’s assets should only be provided if the segments’ assets are regularly provided to the chief operating decision-maker. On 2017, the amendments to IFRS 8 are effective, additional standard will be illustrated for judgmental reference.. IAS 24 was amended to clarify that a management entity providing key management personnel services to the Group is a related party of the Group. Consequently, the Group is required to disclose as related party transactions the amounts incurred for the service paid or payable to the management entity for the provision of key management personnel services. However, disclosure of the components of such compensation is not required. d. Annual Improvements to IFRSs:. 2011-2013 Cycle. Several standards, including IFRS 3 and IFRS 13, were amended in this annual improvement. IFRS 3 was amended to clarify that IFRS 3 does not apply to the accounting for the formation of all types of joint arrangements in the financial statements of the joint arrangement itself. The aforementioned amendment is applied prospectively in 2017. The scope in IFRS 13 of the portfolio exception for measuring the fair value of a group of financial assets and financial liabilities on a net basis was amended to clarify that it includes all contracts that are within the scope of, and accounted for in accordance with, IAS 39 or IFRS 9, even if those contracts do not meet the definitions of financial assets or financial liabilities within IAS 32.. - 11 -. WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. On 2017, the amendments to IFRS 13 are effective, short-term receivables and payables with no stated interest rate should be measured at their invoice amounts if the effect of discounting is immaterial..

(13) e. Amendments to IAS 16 and IAS 38 “Clarification of Acceptable Methods of Depreciation and Amortization” The entity should use appropriate depreciation and amortization method to reflect the pattern in which the future economic benefits of the property, plant and equipment and intangible asset are expected to be consumed by the entity. The amended IAS 16 “Property, Plant and Equipment” requires that a depreciation method that is based on revenue that is generated by an activity that includes the use of an asset is not appropriate. The amended standard does not provide any exception from this requirement. The amended IAS 38 “Intangible Assets” requires that there is a rebuttable presumption that an amortization method that is based on revenue that is generated by an activity that includes the use of an intangible asset is not appropriate. This presumption can be overcome only in the following limited circumstances: 1) In which the intangible asset is expressed as a measure of revenue (for example, the contract that specifies the entity’s use of the intangible asset will expire upon achievement of a revenue threshold); or 2) When it can be demonstrated that revenue and the consumption of the economic benefits of the intangible asset are highly correlated. As of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact of amended IFRS applied on 2017 will have on the financial position and financial performance of each period, and will disclose the relevant impact when the assessment is completed. The International Financial Reporting Standards (IFRS) in issue but not yet endorsed by the FSC. The Group has not applied the following IFRSs issued by the International Accounting Standards Board (IASB) but not yet endorsed by the FSC.. New, Amended or Revised Standards and Interpretations Amendment to IFRS 2 “Classification and Measurement of Share-based Payment Transactions” IFRS 9 “Financial Instruments” Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of IFRS 9 and Transition Disclosures” Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” IFRS 15 “Revenue from Contracts with Customers” Amendment to IFRS 15 “Clarifications to IFRS 15” IFRS 16 “Leases” Amendment to IAS 7 “Disclosure Initiative” Amendments to IAS 12 “Recognition of Deferred Tax Assets for Unrealized Losses” Note:. Effective Date Announced by IASB (Note) January 1, 2018 January 1, 2018 January 1, 2018 To be determined by IASB January 1, 2018 January 1, 2018 January 1, 2019 January 1, 2017 January 1, 2017. Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates. - 12 -. WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. In addition, the FSC announced that the Group should apply IFRS 15 starting January 1, 2018. As of the date the consolidated financial statements were authorized for issue, the FSC has not announced the effective dates of other new standards and interpretations..

(14) a. IFRS 9 “Financial Instruments” Recognition and measurement of financial assets With regards to financial assets, all recognized financial assets that are within the scope of IAS 39 “Financial Instruments: Recognition and Measurement” are subsequently measured at amortized cost or fair value. Under IFRS 9, the requirement for the classification of financial assets is stated below. For the Group’s debt instruments that have contractual cash flows that are solely payments of principal and interest on the principal amount outstanding, their classification and measurement are as follows: 1) For debt instruments, if they are held within a business model whose objective is to collect the contractual cash flows, the financial assets are measured at amortized cost and are assessed for impairment continuously with impairment loss recognized in profit or loss, if any. Interest revenue is recognized in profit or loss by using the effective interest method; 2) For debt instruments, if they are held within a business model whose objective is achieved by both the collecting of contractual cash flows and the selling of financial assets, the financial assets are measured at fair value through other comprehensive income (FVTOCI) and are assessed for impairment. Interest revenue is recognized in profit or loss by using the effective interest method, and other gain or loss shall be recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses. When the debt instruments are derecognized or reclassified, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss. Except for the above, all other financial assets are measured at fair value through profit or loss. However, the Group may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognized in profit or loss. No subsequent impairment assessment is required, and the cumulative gain or loss previously recognized in other comprehensive income cannot be reclassified from equity to profit or loss.. IFRS 9 requires impairment loss on financial assets to be recognized by using the “Expected Credit Losses Model”. The credit loss allowance is required for financial assets measured at amortized cost, financial assets mandatorily measured at FVTOCI, lease receivables, contract assets arising from IFRS 15 “Revenue from Contracts with Customers”, certain written loan commitments and financial guarantee contracts. A loss allowance for the 12-month expected credit losses is required for a financial asset if its credit risk has not increased significantly since initial recognition. A loss allowance for full lifetime expected credit losses is required for a financial asset if its credit risk has increased significantly since initial recognition and is not low. However, a loss allowance for full lifetime expected credit losses is required for trade receivables that do not constitute a financing transaction. For purchased or originated credit-impaired financial assets, the Group takes into account the expected credit losses on initial recognition in calculating the credit-adjusted effective interest rate. Subsequently, any changes in expected losses are recognized as a loss allowance with a corresponding gain or loss recognized in profit or loss. b. IFRS 15 “Revenue from Contracts with Customers” and related amendment IFRS 15 establishes principles for recognizing revenue that apply to all contracts with customers, and will supersede IAS 18 “Revenue”, IAS 11 “Construction Contracts” and a number of revenue-related interpretations from January 1, 2017. - 13 -. WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. Impairment of financial assets.

(15) When applying IFRS 15, an entity shall recognize revenue by applying the following steps:     . Identify the contract with the customer; Identify the performance obligations in the contract; Determine the transaction price; Allocate the transaction price to the performance obligations in the contract; and Recognize revenue when the entity satisfies a performance obligation.. In identifying performance obligations, IFRS 15 and related amendment require that a good or service is distinct if it is capable of being distinct (for example, the Group regularly sells it separately) and the promise to transfer it is distinct within the context of the contract (i.e. the nature of the promise in the contract is to transfer each of those goods or services individually rather than to transfer combined items). When IFRS 15 and related amendment are effective, an entity may elect to apply this Standard either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this Standard recognized at the date of initial application. c. Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” The amendments stipulated that, when an entity sells or contributes assets that constitute a business (as defined in IFRS 3) to an associate or joint venture, the gain or loss resulting from the transaction is recognized in full. Also, when an entity loses control of a subsidiary that contains a business but retains significant influence or joint control, the gain or loss resulting from the transaction is recognized in full. Conversely, when an entity sells or contributes assets that do not constitute a business to an associate, the gain or loss resulting from the transaction is recognized only to the extent of the unrelated investors’ interest in the associate, i.e. the entity’s share of the gain or loss is eliminated. Also, when an entity loses control of a subsidiary that does not contain a business but retains significant influence in an associate, the gain or loss resulting from the transaction is recognized only to the extent of the unrelated investors’ interest in the associate, i.e. the entity’s share of the gain or loss is eliminated.. IFRS 16 sets out the accounting standards for leases that will supersede IAS 17 and a number of related interpretations. Under IFRS 16, if the Group is a lessee, it shall recognize right-of-use assets and lease liabilities for all leases on the consolidated balance sheets except for low-value and short-term leases. The Group may elect to apply the accounting method similar to the accounting for operating lease under IAS 17 to the low-value and short-term leases. On the consolidated statements of comprehensive income, the Group should present the depreciation expense charged on the right-of-use asset separately from interest expense accrued on the lease liability; interest is computed by using effective interest method. On the consolidated statements of cash flows, cash payments for the principal portion of the lease liability are classified within financing activities; cash payments for interest portion are classified within operating activities. The application of IFRS 16 is not expected to have a material impact on the accounting of the Group as lessor. When IFRS 16 becomes effective, the Group may elect to apply this Standard either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of the initial application of this Standard recognized at the date of initial application. - 14 -. WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. d. IFRS 16 “Leases”.

(16) e. Amendments to IAS 12 “Recognition of Deferred Tax Assets for Unrealized Losses” In determining whether to recognize a deferred tax asset, the Group should assess a deductible temporary difference in combination with all of its other deductible temporary differences, unless the tax law restricts the utilization of losses as deduction against income of a specific type, in which case, a deductible temporary difference is assessed in combination only with other deductible temporary differences of the appropriate type. The amendment also stipulates that, when determining whether to recognize a deferred tax asset, the estimate of probable future taxable profit may include some of the Group’s assets for more than their carrying amount if there is sufficient evidence that it is probable that the Group will achieve the higher amount, and that the estimate for future taxable profit should exclude tax deductions resulting from the reversal of deductible temporary differences. Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the Group’s financial position and financial performance, and will disclose the relevant impact when the assessment is completed.. 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Statement of compliance These interim consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IAS 34 “Interim Financial Reporting” as endorsed by the FSC. Disclosure information included in these interim consolidated financial statements is less than the disclosure information required in a complete set of annual financial statements. b. Basis of consolidation Refer to Note 12, Table 8 and Table 10 for detailed information of subsidiaries (included the percentage of ownership and main business).. Except for the following, the accounting policies applied in these consolidated financial statements are consistent with those applied in the consolidated financial statements for the year ended December 31, 2015. For the summary of other significant accounting policies, please refer to the consolidated financial statements for the year ended December 31, 2015. 1) Retirement benefits Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant plan amendments, settlements, or other significant one-off events. 2) Taxation Income tax expense represents the sum of the tax currently payable and deferred tax. Interim period income taxes are assessed on an annual basis and calculated by applying to an interim period’s pre-tax income the tax rate that would be applicable to expected total annual earnings.. - 15 -. WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. c. Other significant accounting policies.

(17) 5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY Refer to the Group’s consolidated financial statements for the year ended December 31, 2015 for significant accounting judgments and estimates and key sources of estimation uncertainty.. 6. CASH AND CASH EQUIVALENTS June 30, 2016 Cash on hand Checking accounts and demand deposits Time deposits with original maturities of less than three months. $. 65,489 3,231,514. December 31, 2015 $. 65,144 4,144,007. June 30, 2015 $. 62,838 3,406,884. 212,256. 149,108. 3,714. $ 3,509,259. $ 4,358,259. $ 3,473,436. 7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS June 30, 2016. December 31, 2015. June 30, 2015. Financial assets held for trading - current Derivative financial assets Forward exchange contracts Nonderivative financial assets Domestic quoted shares Foreign quoted shares. $. 20,170. $. 7,391. $. 1,939. 142,166 57,086. 67,554 101,444. 93,107 101,490. $ 219,422. $ 176,389. $ 196,536. $. $. $. Derivative financial liabilities Forward exchange contracts. 8,179. 6,352. 13,091. At the end of the reporting period, outstanding forward exchange contracts not under hedge accounting were as follows:. Currency. Maturity Date. EUR/NTD EUR/USD USD/NTD JPY/NTD JPY/USD RMB/NTD. 2016.07-2016.11 2016.07-2016.11 2016.07-2016.11 2016.07-2016.12 2016.07-2016.09 2016.07-2016.09. Notional Amount (In Thousands). June 30, 2016 Sell. - 16 -. EUR7,500/NTD275,464 EUR9,000/USD10,214 USD11,372/NTD367,787 JPY280,000/NTD83,646 JPY130,000/USD1,154 RMB80,000/NTD393,709 (Continued). WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. Financial liabilities held for trading - current.

(18) Notional Amount (In Thousands). Currency. Maturity Date. EUR/NTD EUR/USD USD/NTD JPY/NTD JPY/USD RMB/NTD RMB/USD. 2016.01-2016.04 2016.01-2016.04 2016.01-2016.02 2016.01-2016.05 2016.01-2016.05 2016.01-2016.03 2016.01-2016.02. EUR5,000/NTD179,073 EUR6,500/USD7,102 USD1,499/NTD49,190 JPY200,000/NTD53,236 JPY70,000/USD582 RMB64,000/NTD321,201 RMB15,000/USD2,323. EUR/NTD EUR/USD USD/NTD JPY/USD JPY/NTD RMB/NTD. 2015.07-2015.10 2015.07-2015.08 2015.07-2015.09 2015.12 2015.07-2015.12 2015.07-2015.09. EUR11,500/NTD391,142 EUR1,000/USD1,115 USD4,615/NTD141,625 JPY10,000/USD81 JPY300,000/NTD76,483 RMB81,000/NTD399,739 (Concluded). December 31, 2015 Sell. June 30, 2015 Sell. The Company entered into forward exchange contracts during the six months ended June 30, 2016 and 2015 to manage exposures due to exchange rate fluctuations of foreign-currency denominated assets and liabilities. The Company’s financial hedging strategy is to minimize risks due to market price fluctuations and cash flows; however, because these contracts did not meet the criteria for hedge effectiveness, they were not subject to hedge accounting.. 8. AVAILABLE-FOR-SALE FINANCIAL ASSETS June 30, 2016. December 31, 2015. June 30, 2015. $ 3,044,922 538,010. $ 1,271,302 484,541. $ 4,051,678 575,144. -. -. 944,872. $ 3,582,932. $ 1,755,843. $ 5,571,694. $ 1,672,650 9,375. $ 1,704,966 9,375. $ 1,940,676 9,375. 33,257. 33,257. 33,257. $ 1,715,282. $ 1,747,598. $ 1,983,308. Domestic investments Mutual funds Quoted shares Foreign investments Investment products denominated in RMB. Noncurrent Domestic investments Quoted shares Unlisted shares Foreign investments Unlisted foreign shares. - 17 -. WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. Current.

(19) For its securities borrowing and lending transactions, the Group placed some of its quoted domestic stocks, recorded under available-for-sale assets - noncurrent, in a trust at Chinatrust Commercial Bank. As of June 30, 2016, December 31, 2015 and June 30, 2015, the stocks held in trust amounted to $1,240,815 thousand, $1,276,400 thousand and $1,611,887 thousand, respectively. Refer to Table 3 for more information. On the transactions, the Group recognized gains of $55 thousand and $1 thousand in the six months ended June 30, 2016 and 2015, respectively. These gains were recorded under other nonoperating income.. 9. DEBT INVESTMENTS WITH NO ACTIVE MARKET June 30, 2016 Time deposits with original maturities of more than three months. $. December 31, 2015. 8,111. $. June 30, 2015. 3,171. $ 20,703. 10. NOTES AND ACCOUNTS RECEIVABLE June 30, 2016 830,722. December 31, 2015 $. 970,722. June 30, 2015. Notes receivable (include related parties). $. $. 718,428. Accounts receivable Less: Allowance for impairment loss. $ 6,406,321 (131,381). $ 5,577,733 (149,159). $ 5,856,449 (143,963). $ 6,274,940. $ 5,428,574. $ 5,712,486. The average credit period on sales of goods was from 30 to 90 days. In determining the recoverability of an accounts receivable, the Group considered any change in the credit quality of the accounts receivable since the date credit was initially granted to the end of the reporting period. The Group recognized an allowance for impairment loss of 100% against all receivables over 1 year because historical experience had been that receivables that are past due beyond 1 year were not recoverable. Allowance for impairment loss were recognized against accounts receivable between 90 days and 1 year based on estimated irrecoverable amounts determined by reference to past default experience of the counterparties and an analysis of their current financial position. For the accounts receivable balances that were past due at the end of the reporting period, the Group did not recognize an allowance for impairment loss, because there was not a significant change in credit quality and the amounts were still considered recoverable. The Group did not hold any collateral or other credit enhancements for these balances.. - 18 -. WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. Accounts Receivable.

(20) The aging of receivables was as follows:. Not overdue Overdue 1 to 90 days 91 to 360 days Over 360 days. June 30, 2016. December 31, 2015. June 30, 2015. $ 5,661,495. $ 4,457,975. $ 4,906,513. 636,820 92,047 15,959. 909,380 131,727 78,651. 758,853 110,956 80,127. $ 6,406,321. $ 5,577,733. $ 5,856,449. The above aging schedule was based on the past due days from end of credit term. The aging of receivables that were past due date but not impaired were as follows: June 30, 2016. December 31, 2015. June 30, 2015. $ 558,404 64,303 14,113. $ 714,634 139,362 55,384. $ 637,099 73,866 47,888. $ 636,820. $ 909,380. $ 758,853. 1 to 30 days 31 to 60 days 61 to 90 days. The above aging schedule was based on the past due dates.. Individually Assessed for Impairment. Collectively Assessed for Impairment. Total. 19,802. $ 130,200. $ 150,002. 1,295. 5,343. 6,638. (6,940) (5,737). (6,940) (5,737). Balance at January 1, 2015 Add: Impairment losses recognized on receivables Deduct: Amounts written off during the period as uncollectible Foreign exchange translation losses. $. Balance at June 30, 2015. $. 21,097. $ 122,866. $ 143,963. Balance at January 1, 2016 Add: Impairment losses recognized on receivables Deduct: Amounts written off during the period as uncollectible Impairment losses recognized from business combination Foreign exchange translation losses. $. 17,569. $ 131,590. $ 149,159. Balance at June 30, 2016. $. -. (13,632) -. - 19 -. 3,937. (10,841). (10,841). (3,607). (17,239). 11,918 (1,616). 11,918 (1,616). $ 127,444. $ 131,381. WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. The movements of the allowance for doubtful trade receivables were as follows:.

(21) 11. INVENTORIES. Raw materials Work in process Finished goods Inventories in transit. June 30, 2016. December 31, 2015. June 30, 2015. $ 1,804,875 976,364 1,693,240 516,483. $ 1,489,432 974,373 1,875,649 529,406. $ 1,741,583 968,881 1,577,299 392,132. $ 4,990,962. $ 4,868,860. $ 4,679,895. The costs of inventories recognized as costs of goods sold for the three months ended June 30, 2016 and 2015 were $6,338,197 thousand and $5,925,185 thousand, respectively, and for the six months ended June 30, 2016 and 2015 were $12,156,221 thousand and $11,037,055 thousand, respectively. The costs of inventories were decreased by $541,090 thousand, $443,926 thousand and $444,389 thousand as of June 30, 2016, December 31, 2015 and June 30, 2015, respectively when stated at the lower of cost or net realizable values.. 12. SUBSIDIARIES Subsidiaries included in the consolidated financial statements. The entities include in the consolidated statements are listed below.. The Company. Investee AAC (BVI) ATC Advanixs Corporation (formerly Advansus Corp.) Advantech Corporate Investment AEUH ASG AAU AJP AMY AKR ABR ACA AIN AdvanPOS ALNC AMX Advantech Innovative Design Co., Ltd. Advantech iFactory Co., Ltd. B+B. Advantech Corporate Investment. AiST Cermate. ATC ATC (HK). ATC (HK) AKMC. AAC (BVI). Yeh-Chiang Technology Kun Shan Co., Ltd. ANA AAC (HK). Nature of Activities. Remark. Investment and management service Sale of industrial automation products Production and sale of industrial automation products. 100.00 100.00 100.00. 100.00 100.00 100.00. 100.00 100.00 100.00. a). Investment holding company. 100.00. 100.00. 100.00. a). Investment and management service Sale of industrial automation products Sale of industrial automation products Sale of industrial automation products Sale of industrial automation products Sale of industrial automation products Sale of industrial automation products Production and sale of portable industrial automation products Sale of industrial automation products Production and sale of POS system Production and sale of machines with computerized numerical control Sale of industrial automation products Product design. 100.00 100.00 100.00 100.00 100.00 100.00 80.00 100.00. 100.00 100.00 100.00 100.00 100.00 100.00 80.00 100.00. 100.00 100.00 100.00 100.00 100.00 100.00 80.00 100.00. a) a) a) a) a) a) a). 99.99 100.00 90.00. 99.99 100.00 89.93. 99.99 84.01 89.93. 100.00 100.00. 100.00 100.00. 100.00 100.00. a) a). Cybernation equipment manufacturing Sale of industrial network communications systems Design, develop and sale of intelligent service Manufacturing of electronic parts, computer, and peripheral devices Investment and management service Production and sale of components of industrial automation products Production and sale of industrial automation products Sale and fabrication of industrial automation products Investment and management service. 100.00 60.00. 100.00 -. 100.00 -. a) e). 100.00. 100.00. 100.00. a). 55.00. 55.00. 55.00. a). 100.00 100.00. 100.00 100.00. 100.00 100.00. 100.00. -. -. 100.00. 100.00. 100.00. 100.00. 100.00. 100.00. a) a), c) a), d). g). (Continued). - 20 -. WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. Investor. Proportion of Ownership December 31, June 30, 2016 2015 June 30, 2015.

(22) Investor. Investee. ANA. B+B. AAC (HK). ACN AiSC AXA. ACN AEUH AEU. ASG Cermate Land Mark. AdvanPOS Bright Mind Ltd. ALNC Better Auto Famous Now Limited B+B. Hangzhou Advantofine Automation Co., Ltd. AEU APL A-DLoG. ATH AID Land Mark Cermate (Shanghai) Cermate (Shenzhen) Bright Mind Ltd. AdvanPOS Shanghai Better Auto Famous Now Limited Dongguan Pou Yuen Digital Technology Co., Ltd. BBI Quatech IMC. BBI. BBE B+B (CZ) (formerly Conel). BBE. Conel Automation (formerly Softcon) B+B (CZ). B+B (CZ). Conel Automation. Nature of Activities Sale of industrial network communications Sale of industrial automation products Production and sale of industrial automation products Development and production of software products Processing and sale of industrial automation products Sale of industrial automation products Sale of industrial automation products Design, R&D and sale of industrial automation vehicles and related products Production of computers Sale of industrial automation products General investment Sale of industrial electronic equipment Production of LCD touch panel, USB cable, and industrial computer General investment Production and sale of POS system General investment General investment Production and sale of industrial automation products Sale of industrial network communications systems Sale of industrial network communications systems Sale of industrial network communications systems Sale of industrial network communications systems Manufacturing of cellular and automation solution Sale of industrial network communications systems Manufacturing of cellular and automation solution Sale of industrial network communications systems. Proportion of Ownership December 31, June 30, 2016 2015 June 30, 2015. Remark. 40.00. -. -. e). 100.00 100.00. 100.00 100.00. 100.00 100.00. b). 100.00. 100.00. 100.00. 100.00. 60.00. 60.00. f). 100.00 100.00 100.00. 100.00 100.00 100.00. 100.00 100.00 100.00. a) a). 51.00 100.00 100.00 100.00 90.00. 51.00 100.00 100.00 100.00 90.00. 51.00 100.00 100.00 100.00 90.00. a) a) a) a) a). 100.00 100.00 100.00. 100.00 100.00 100.00 100.00 100.00. 100.00 100.00 100.00 100.00 100.00. a), h) a), h) a) a) a). 100.00. -. -. e). 100.00. -. -. e). 100.00. -. -. e). 100.00. -. -. e). 99.99. -. -. e). 1.00. -. -. e). 0.01. -. -. e). 99.00. -. -. e). (Concluded) Remark a: Not significant subsidiaries and their financial statements had not been reviewed.. Remark c: In the third quarters of 2015, the Company subscribed for an additional 3,268 thousand shares of AdvanPOS, and the Company’s equity increased from 84.01% to 100%. Remark d: In the first quarter of 2016, the Company bought back employee share pertaining to a 0.07% equity in ALNC, increasing the Company’s interest in ALNC from 89.93% to 90%. Remark e: In the first quarter of 2016, the Group acquired 100% share equity of B+B with acquirement of 60% and 40% of B+B’s share equity by the Company and ANA, respectively. Remark f: In the first quarter of 2016, ACN acquired 40% equity of Hangzhou Advantofine Automation Co., Ltd., which led ACN’s equity investment in the above subsidiary increased from 60% to 100%. Remark g: In the second quarter of 2016, ATC in issuance of common stock for cash to ATC (HK) acquired 100% equity of Yeh-Chiang Technology Kun Shan Co., Ltd. Remark h: In the second quarter of 2016, Bright Mind Ltd. and AdvanPOS Shanghai processed liquidation, which were not included in consolidated financial statement.. - 21 -. WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. Remark b: As of January 1, 2016, AiSC was no longer a significant subsidiary, and its financial statements for the six months ended June 30, 2016 had not been reviewed..

(23) 13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD Investments in Associates June 30, 2016. December 31, 2015. June 30, 2015. $ 409,659. $ 450,246. $ 375,963. 131,313 17,284 8,743. 18,228 9,510. 17,907 9,710. $ 566,999. $ 477,984. $ 403,580. Associates that are not individually material Listed companies Axiomtek Co., Ltd. (Axiomtek) Unlisted companies AIMobile Co., Ltd. (AIMobile) Deneng Scientific Research Co., Ltd. (Deneng) Jan Hsiang Electronics Co., Ltd. (Jan Hsiang). In the second quarter 2016, the Group paid cash $135,000 thousand to establishment of “AIMobile Co., Ltd.” by a joint investment with Inventec Corporation. The Group and Inventec Corporation held equity interests of 45% and 55%, respectively. The Group had significant influence ever AIMobile. Fair value (Level 1) of investments in associates with available published price quotation are summarized follows: Name of Associate Axiomtek. June 30, 2016. December 31, 2015. June 30, 2015. $ 1,330,861. $ 1,287,732. $ 1,378,099. The Group’s investment in the above associate was accounted for using the equity method. Except for Axiomtek, investments accounted for by the equity method and the share of profit or loss and other comprehensive income of those investments were calculated based on the financial statements that have been unreviewed.. Freehold Land. Buildings. Equipment. Office Equipment. Other Facilities. Construction in Progress. Total. Cost Balance at January 1, 2015 Additions Disposals Reclassifications Effect of exchange differences. $. 3,065,315 (6,678 ). $. 5,320,186 82,545 (5,438 ) (74,301 ). $. 1,554,609 26,215 (37,777 ) 27,063 (15,912 ). $. 757,649 28,270 (7,887 ) (1,845 ) (19,779 ). $. 1,364,432 115,082 (32,429 ) 25,402 (26,320 ). $. 40,886 468,621 (16,765 ) (367 ). $ 12,103,077 720,733 (78,093 ) 28,417 (143,357 ). Balance at June 30, 2015. $. 3,058,637. $. 5,322,992. $. 1,554,198. $. 756,408. $. 1,446,167. $. 492,375. $ 12,630,777. Balance at January 1, 2015 Disposals Depreciation expense Reclassifications Effect of exchange differences. $. -. $. 899,536 79,113 (857 ) (17,703 ). $. 1,044,178 (36,903 ) 66,770 1 (8,926 ). $. 490,419 (7,211 ) 47,402 (5,399 ) (14,496 ). $. 792,338 (13,046 ) 86,770 2,427 (15,365 ). $. -. $. 3,226,471 (57,160 ) 280,055 (3,828 ) (56,490 ). Balance at June 30, 2015. $. -. $. 960,089. $. 1,065,120. $. 510,715. $. 853,124. $. -. $. 3,389,048. Carrying amounts at June 30, 2015. $. 3,058,637. $. 4,362,903. $. 489,078. $. 245,693. $. 593,043. $. 492,375. $. 9,241,729. Accumulated depreciation and impairment. (Continued). - 22 -. WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. 14. PROPERTY, PLANT AND EQUIPMENT.

(24) Freehold Land. Buildings. Office Equipment. Equipment. Other Facilities. Construction in Progress. Total. Cost Balance at January 1, 2016 Additions Disposals Acquisition through business combination Reclassifications Effect of exchange differences. $. 3,068,264 (172,299 ). $. Balance at June 30, 2016. $. 2,906,008. $. 5,481,972. $. 1,608,727. $. 858,773. $. Balance at January 1, 2016 Disposals Depreciation expense Acquisition through business combination Reclassifications Effect of exchange differences. $. -. $. 1,046,061 (16,148 ) 80,548. $. 1,063,028 (11,287 ) 65,262. $. 545,767 (13,381 ) 50,932. $. Balance at June 30, 2016. $. -. $. 1,178,058. $. 1,167,712. $. 655,845. $. 1,008,966. $. -. $. 4,010,581. Carrying amounts at June 30, 2016. $. 2,906,008. $. 4,303,914. $. 441,015. $. 202,928. $. 559,626. $. 1,452,859. $. 9,866,350. 12,644 (2,601 ). 5,348,990 577 (94,908 ). $. 308,798 2,700 (84,185 ). 1,533,640 20,557 (13,292 ). $. 84,400 1,433 (18,011 ). 770,295 24,595 (15,254 ). $. 1,533,038 45,276 (20,619 ). 89,771 (229 ) (10,405 ). $. 25,390 8,772 (23,265 ) 1,568,592. 915,128 564,610 -. $ 13,169,355 655,615 (316,372 ). (26,811 ) (68 ) $. 1,452,859. $. -. 521,003 (14,135 ) (138,535 ) $ 13,876,931. Accumulated depreciation and impairment. -. 88,296 188 (20,887 ). 61,837 (11,128 ). 937,620 (14,983 ) 95,075. 82,180 (1,538 ) (8,115 ). 4,771 (276 ) (13,241 ). $. -. 3,592,476 (55,799 ) 291,817 237,084 (1,626 ) (53,371 ). (Concluded) The above items of property, plant and equipment were depreciated on a straight-line basis over the following economic lives: Buildings Main buildings Electronic equipment Engineering systems Equipment Office equipment Other facilities. 20-60 years 5 years 5 years 2-8 years 2-8 years 2-10 years. 15. GOODWILL For the Six Months Ended June 30 2016 2015. Balance at January 1 Additional amounts recognized from business combinations during the period (Note 25) Effect of exchange differences. $ 1,139,559. $ 1,168,727. Balance at June 30. $ 3,399,784. $ 1,125,132. December 31, 2015. June 30, 2015. 2,311,181 (50,956). (43,595). 16. PREPAYMENTS FOR LEASE OBLIGATION June 30, 2016 Current assets (included in other current assets) Noncurrent assets. $. 9,397 345,986. $ 355,383 - 23 -. $. 2,557 100,875. $. 2,546 92,987. $ 103,432. $. 95,533. WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. Cost.

(25) Lease prepayments are for the Group’s land-use right in Mainland China.. 17. BORROWINGS Short-term Borrowings June 30, 2016. December 31, 2015. June 30, 2015. $ 484,125. $ 880,625. $ 115,000. Unsecured borrowings Line of credit borrowings. The weighted average effective interest rates on bank loans were 1.15%, 1.28%-1.84% and 1.31%-1.32% per annum as of June 30, 2016, December 31, 2015 and June 30, 2015, respectively.. 18. OTHER LIABILITIES. Other payables Payable for salaries or bonuses Payable for employee benefits Payable for royalties Others (Note). Note:. June 30, 2016. December 31, 2015. June 30, 2015. $ 2,143,352 145,015 120,379 946,929. $ 2,167,475 138,206 105,186 969,450. $ 1,971,429 129,519 45,494 979,411. $ 3,355,675. $ 3,380,317. $ 3,125,853. Including accruals of litigation, marketing expenses, and freight expenses.. Employee benefit expenses in respect of the Group’s defined benefit retirement plans were $1,391 thousand, $1,348 thousand, $2,782 thousand and $2,753 thousand for the three months and six months ended June 30, 2016 and 2015, respectively, and were calculated using the actuarially determined pension cost discount rate as of December 31, 2015 and 2014.. 20. EQUITY a. Share capital Ordinary shares. Number of shares authorized (in thousands) Amount of shares authorized Number of shares issued and fully paid (in thousands) Amount of shares issued and fully paid. June 30, 2016. December 31, 2015. June 30, 2015. 800,000 $ 8,000,000. 800,000 $ 8,000,000. 800,000 $ 8,000,000. 631,853 $ 6,318,531. 631,853 $ 6,318,531. 631,690 $ 6,316,906. - 24 -. WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. 19. RETIREMENT BENEFIT PLANS.

(26) Fully paid ordinary shares, which have a par value of NT$10, carry one vote per share and carry a right to dividends. For the year ended December 31, 2015, changes in shares are due to employees’ exercise of their employee share options. b. Capital surplus. June 30, 2016. December 31, 2015. June 30, 2015. $ 3,396,888 931,849. $ 3,396,888 931,849. $ 3,396,888 931,849. 4,246 792,341 78,614. 4,246 792,341 78,614. 4,246 779,913 78,614. 14,879 501,858. 12,698 370,919. 10,653 246,380. $ 5,720,675. $ 5,587,555. $ 5,448,543. May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (1) Arising from issuance of common shares Arising from conversion of bonds May be used to offset a deficit only Arising from changes in percentage of ownership interest in subsidiaries (2) Arising from employee share options Arising from distribution of stock dividends May not be used for any purpose Arising from share of changes in capital surplus of associates Arising from employee share options. 2) Such capital surplus arises from the effect of changes in ownership interest in a subsidiary resulted from equity transactions other than actual disposal or acquisition, or from changes in capital surplus of subsidiaries accounted for by using equity method. c. Retained earnings and dividend policy In accordance with the amendments to the Company Act in May 2015, the recipients of dividends and bonuses are limited to shareholders and do not include employees. The shareholders held their regular meeting on May 25, 2016 and, in that meeting, had resolved amendments to the Company’s Articles of Incorporation (the “Articles”), particularly the amendment to the policy on dividend distribution and the addition of the policy on distribution of employees’ compensation. Under the dividend policy as set forth in the amended Articles, where the Company made profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting aside or reversing special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Company’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for distribution of dividends - 25 -. WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. 1) Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company’s capital surplus and once a year)..

(27) and bonus to shareholders. For the policies on distribution of employees’ compensation and remuneration to directors and supervisors before and after amendment, please refer to c Employee benefits expense in Note 21. The Company operates in an industry related to computers, and its business related to network servers is new but with significant potential for growth. Thus, in formulating its dividend policy, the Company takes into account the overall business and industry conditions and trends, its objective of enhancing the shareholders’ long-term interests, and the sustainability of the Company’s growth. The policy also requires that stock dividends be less than 75% of total dividends to retain internally generated cash within the Company to finance future capital expenditures and working capital requirements. Any appropriations from earnings should be recorded in the year of shareholders’ approval, following the year the earnings were generated. Appropriation of earnings to legal reserve should be made until the legal reserve equals the Company’s paid-in capital. Legal reserve may be used to offset deficit. If the Company has no deficit and Legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash. Under Rule No. 1010012865 and Rule No. 1010047490 issued by the FSC and the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs”, the Company should appropriate or reverse to a special reserve. Except for non-ROC resident shareholders, all shareholders receiving the dividends are allowed a tax credit equal to their proportionate share of the income tax paid by the Company. The appropriation of earnings, for 2015 and 2014 have been approved in the shareholders’ meetings on May 25, 2016 and May 28, 2015, respectively, were as follows: Dividends Per Share (NT$) For the Year Ended December 31 2015 2014. Legal reserve Cash dividends. $. 510,434 3,791,118. $. 490,778 3,787,255. $. 6.0. $. 6.0. d. Other equity items 1) Exchange difference arising on translating the financial statements of foreign operations For the Six Months Ended June 30 2016 2015 Balance at January 1 Exchange differences on translating the net assets of foreign operations Related income tax Share of exchange difference of associates accounted for using the equity method. $ 271,859. Balance at June 30. $ 108,555. - 26 -. $ 338,356. (194,451) 33,448. (327,825) 56,597. (2,301). (5,095) $. 62,033. WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. Appropriation of Earnings For the Year Ended December 31 2015 2014.

(28) 2) Unrealized gain or loss from available-for-sale financial assets For the Six Months Ended June 30 2016 2015 Balance at January 1 Unrealized gain on revaluation of available-for-sale financial assets Cumulative gain reclassified to profit on disposal of available-for-sale financial assets. $. 68,265. $ 563,277. 46,253. 14,973. (5,210). (161,154). Balance at June 30. $ 109,308. $ 417,096. e. Non-controlling interests For the Six Months Ended June 30 2016 2015 Balance at January 1 Attributable to non-controlling interests: Share of profit for the period Exchange difference arising on translation of foreign entities Non-controlling interests arising from acquisition of subsidiaries (Note 26). $ 146,276. Balance at June 30. $ 135,322. $ 187,000. 9,479 (11,011). 4,118 (13,989). (9,422). (21,716) $ 155,413. 21. NET PROFIT FROM CONTINUING OPERATIONS a. Finance costs. Interest on bank loans. $. 1,315. $. 1,195. For the Six Months Ended June 30 2016 2015 $. 3,397. $. 2,046. b. Depreciation and amortization For the Three Months Ended June 30 2016 2015 Property, plant and equipment Intangible assets. For the Six Months Ended June 30 2016 2015. $ 143,090 62,306. $ 140,155 10,244. $ 291,817 181,525. $ 280,055 41,637. $ 205,396. $ 150,399. $ 473,342. $ 321,692 (Continued). - 27 -. WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. For the Three Months Ended June 30 2016 2015.

(29) For the Three Months Ended June 30 2016 2015 An analysis of depreciation by function Operating costs Operating expenses. An analysis of amortization by function Operating costs Selling and market expenses General and administrative expenses Research and development expenses. $. 34,362 108,728. $. 33,001 107,154. For the Six Months Ended June 30 2016 2015. $. 69,624 222,193. $. 64,598 215,457. $ 143,090. $ 140,155. $ 291,817. $ 280,055. $. $. $. $. $. 37 24. 72 66. 74 48. 172 145. 54,664. 3,268. 166,762. 28,067. 7,581. 6,838. 14,641. 13,253. 10,244. $ 181,525. 62,306. $. $ 41,637 (Concluded). c. Employee benefit expense. Short-term benefits Post-employment benefits Defined contribution plans Defined benefit plans (Note 19). For the Six Months Ended June 30 2016 2015. $ 1,939,136. $ 1,680,580. $ 3,857,873. $ 3,342,430. 71,189. 64,862. 148,386. 130,583. 1,391 72,580. 1,348 66,210. 2,782 151,168. 2,753 133,336. Share-based payments Equity-settled Other employee benefits. 65,470 119,937. 65,470 172,008. 130,939 279,558. 130,939 286,445. Total employee benefits expense. $ 2,197,123. $ 1,984,268. $ 4,419,538. $ 3,893,150. $. $. $. $. An analysis of employee benefits expense by function Operating costs Operating expenses. 446,218 1,750,905. $ 2,197,123. 400,685 1,583,583. $ 1,984,268. 911,103 3,508,435. $ 4,419,538. 830,888 3,062,262. $ 3,893,150. In compliance with the Company Act as amended in May 2015, the shareholders held their meeting and resolved amendments to the Company’s Articles on May 25 2016; the amendments stipulate distribution of employees’ compensation at rates no less than 1% and no higher than 20%, and remuneration to directors and supervisors at the rates no higher than 1%, of net profit before income tax, employees’ compensation, and remuneration to directors and supervisors.. - 28 -. WorldReginfo - 3acd3be2-7335-4958-9779-fd840cca79ea. For the Three Months Ended June 30 2016 2015.